The Misappropriation Theory Under the Chinese Securities Law – A Comparative Study With its U.S. Counterpart

By: Wenyan Ma


The first stock exchange in China, the Shanghai Stock Exchange, opened n December 1990. Since then, China’s securities market has been a journey of unprecedented development. However, the fledgling securities market is troubled by rampant securities fraud, evidence by Chinese officials’ open admission that investment in China’s securities market is very risky because of fraud and corruption. After a tortuous six-year drafting process, on December 29, 1998, the Chinese parliament passed the country’s first national Securities Law (“the Chinese Securities Law”), hoping to regulate the overwhelming fraud and corruption in China’s securities market. The Chinese Securities Law devoted one entire section of the Chapter “Securities Trade,” entitled “Prohibited Trading Activities,” to regulate securities fraud.

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